When analysts and fund managers gather in picturesque St Helena and its surrounds in California's Napa Valley on March 9 and 10 for a full run-through by Treasury Wine Estates' plan for super-charging its American wine business, the lessons of history may loom large.

Chief executive Michael Clarke is well-deserving of the accolades bestowed on him for turning the owner of Penfolds, Wolf Blass and Wynns into a $9 billion company, and enriching shareholders who are toasting a four-fold climb in its share price to beyond $12 in just three years. The decision by the Treasury board in early 2014 to choose the former food executive from Kraft and British gravy and cakes maker Premier Foods was a shrewd one.

Having fuelled an extraordinary jump in profits from China after re-positioning Penfolds as a luxury product with Wolf Blass in its slipstream, Mr Clarke will now spend much more of his time in the Treasury offices in California as he attempts an even tougher re-invigoration in the land of Donald Trump.

Profit margins are running the right way in the Americas business, which now makes up 40 per cent of Treasury's global earnings at $91 million and even outshines by profit contribution the booming Asian arm, which was at $79 million on first-half numbers from 2016-17.

Treasury Wine Estates non-current luxury inventory

The American business produced profit margins of 16.0 per cent in the first half of 2016-17, up from 11.5 per cent a year before. The addition of the Diageo brands after the $754 million acquisition of that business in late 2015 gives fresh impetus as somewhat tired brands have a marketing makeover after being unloved.

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While the brand portfolio, which includes Sterling Vineyards, Beaulieu Vineyard and Beringer, has been expanded, it is worth remembering that the Beringer business which is still Treasury's cornerstone, had much fatter margins when it went into the stable 17 years ago.

It's a cautionary tale of how economics can change, conditions shift as competitors respond, and consumer buying patterns move.

Beringer Wine Estates had a profit margin of 27 per cent in 2000 when it was acquired for $2.9 billion by Foster's Group, the beer giant which was then building a sizeable wine business. Some big California grape harvests followed soon after, while the ongoing internal corporate wrestling, where perhaps the wine division wasn't given the same sharp focus in a big alcohol conglomerate, meant Beringer lost its way in the 2000s. Hundreds of millions of dollars of value were written down off the original purchase price in several chunks.

Smart execution of the American wine growth strategy is crucial to the fortunes of Treasury now.

Bank of America Merrill Lynch analyst David Errington expects at least $30 million in earnings uplift from the Americas division, from both the underlying business improvements in the Beringer business and the full inclusion of the Daigeo brands.

He puts a $14.70 valuation on the company and points out that Treasury's long-term growth outlook is "materially higher than the market".

In practical terms, the upside for Mr Clarke is there for all to see provided he can execute well. As sharemarket investors look forlornly at many of the alternatives in a low-growth environment, what he's done in China serves as a template for what may be around the corner.

Mr Errington closely monitors the inventory levels of "luxury" wines at Treasury and likes what he sees, because of the earnings "tailwinds" it provides.

The amount of high-end wines sitting in cellars awaiting a move out onto the market is looking promising, with a rise of $63 million to $352 million in current luxury inventory in the first half, and a $20 million increase in $529 million worth of luxury wines classified as non-current inventory.

The FMCG Recipe

Mr Clarke's recipe at Treasury thus far has been to impose far stricter fast-moving consumer goods management techniques, and use a robust lift in marketing investment behind the most profitable brands – paid for by supply-chain cost savings – to drive better returns. In simplistic terms, he took much greater control of the finished product and rationed some of it in the marketplace to ensure scarcity fed into consumer thinking, a must in the "luxury" segment for any item be it leather handbags, designer shoes or exclusive watches.

Shovelling everything out to the market depending on how big the grape harvest had been is now forbidden. It's worked wonders for the Australian brands such as Penfolds, Wolf Blass and Wynns. A similar approach is now happening with the Californian brands, the top tier of which is also making its way into the fast-growing China market where French and Italian wines at the high end are coming under more pressure. The makeover of the Sterling Vineyards packaging with eye-catching silver labels and an advertising campaign targeting high-earning millennials which evokes "La La Land"-type dreamy glamour is part of the armoury.

JP Morgan analyst Shaun Cousins says Treasury stripped out 1 million cases from its lower-end commercial business in the US through sell-offs which helped margin expansion in that region, while cost control was also good.

He suggests there are "multiple drivers" for a continuation of the Treasury turnaround under Mr Clarke. He points to scarcity of earnings growth in other ASX-listed companies and the "strong execution" so far by the new Treasury management as sound reasons why the risk-reward equation is still attractive.

Mr Cousins says distributor relationships will be crucial in the US execution because of the "prominent role distributors play". But he also points out that distributors like brands that drive sales. Everyone except the end buyer makes more money when a brand is on the up and having plenty of marketing dollars ploughed in behind it.

Being closer to those powerful distributors is part of the reason why Mr Clarke will have a semi-permanent office in the Napa Valley, and spend less time at Melbourne headquarters. JP Morgan expects overall Treasury revenues to rise to $2.82 billion in 2017-18 and then $2.996 billion the following year.

Mr Clarke is something of the new messiah when it comes to running a profitable wine company, particularly after the 2013 mess in the United States under previous management, which resulted in Treasury becoming an embarrassment. It was caught with mountains of unwanted cheaper wines in the warehouses of US liquor distributors which weren't selling. The now infamous crushing of millions of bottles of cheap wine under steamrollers, which happened in the US under orders by Treasury who wanted to rid the market of the excess stock, is unthinkable under the much tighter management now.

Market chatter often focuses on the possibility of Treasury doing another Diageo-style acquisition in the US soon. Credit Suisse analyst Larry Gandler estimates Treasury's debt capacity sits at up to $1.2 billion, on the assumption it would pay a multiple of 9 times earnings for a decent wine business. Mr Gandler suggests a transaction of that size, if it were debt-funded, could add 7 per cent to earnings per share for 2018-19.

Treasury's 62,000 shareholders can be thankful that when it was spun off from Foster's in 2011 into a stand-alone ASX wine company it had minimal debt levels of $200 million, and has been spared from any onerous debt repayment regime as it set about becoming a bigger player on the world stage.